Exhibit 99.1
Equinix Reports Third Quarter 2007 Results
-- Increased revenues to $103.8 million, a 13% increase over the
previous quarter and a 41% increase over the same quarter last
year
-- Increased quarterly EBITDA, a non-GAAP financial measure, to
$40.6 million, a 15% increase over the previous quarter
-- Raised 2007 annual revenue guidance to $416.0 to $417.5
million and EBITDA guidance to $153.0 to $154.0 million
-- Raised 2008 annual revenue guidance to $625.0 to $640.0
million and EBITDA guidance to $240.0 million to $250.0
million
-- Opened greenfield expansion IBX in the Chicago metro area in
October, its third IBX center in the region
FOSTER CITY, Calif.--(BUSINESS WIRE)--Oct. 30, 2007--Equinix, Inc.
(Nasdaq:EQIX), the leading provider of network-neutral data centers
and Internet exchange services, today reported quarterly results for
the period ended September 30, 2007.
Revenues were $103.8 million for the third quarter, a 13% increase
over the previous quarter and a 41% increase over the same quarter
last year, including approximately $5.5 million of revenues from
Europe as a result of the IXEurope acquisition that closed on
September 14, 2007. Recurring revenues, consisting primarily of
colocation, interconnection and managed services, were $99.3 million,
a 13% increase over the prior quarter and a 42% increase over the same
quarter last year. Non-recurring revenues were $4.5 million in the
quarter.
Cost of revenues were $62.9 million for the third quarter,
including $878,000 of stock-based compensation, a 13% increase over
the previous quarter and a 28% increase over the same quarter last
year, including cost of revenues of $4.0 million from Europe. Cost of
revenues, excluding depreciation, amortization, accretion and
stock-based compensation of $22.7 million, were $40.2 million for the
third quarter, a 19% increase over the previous quarter and a 35%
increase over the same quarter last year. Cash gross margins, defined
as gross profit less depreciation, amortization, accretion and
stock-based compensation, divided by revenues, for the quarter were
61%, down from 63% the previous quarter and up from 60% the same
quarter last year. On a same IBX basis (defined as IBX centers which
have been available for new customer installs for at least four full
quarters), cash gross margins were 65%.
Selling, general and administrative expenses were $34.8 million
for the third quarter, including $9.6 million of stock-based
compensation, a 4% increase from the previous quarter and a 33%
increase over the same quarter last year, including selling, general
and administrative expenses of $2.0 million from Europe. Selling,
general and administrative expenses, excluding depreciation,
amortization and stock-based compensation of $11.9 million, were $22.9
million for the third quarter, a 1% increase over the previous quarter
and a 20% increase over same quarter last year.
Net income for the third quarter was $4.1 million, including
stock-based compensation expense of $10.5 million. This represents
basic net income per share of $0.13 and diluted net income per share
of $0.12 based on a weighted average share count of 31.7 million and
33.1 million, respectively.
EBITDA, defined as income or loss from operations before
depreciation, amortization, accretion, stock-based compensation
expense and restructuring charges, for the third quarter was $40.6
million, up from $35.3 million the previous quarter and up from $24.9
million the same quarter last year.
"Equinix continued to deliver strong results across all areas of
the business," said Steve Smith, CEO of Equinix. "As we look into
2008, the business has never been better and we intend to fully
capitalize on the strong market fundamentals and our solid execution
to maximize our global market leadership position."
Capital expenditures in the third quarter were $88.9 million, of
which $5.0 million was attributed to ongoing capital expenditures and
$83.9 million was attributed to expansion capital expenditures. This
result is less than expected, as certain capital expenditures
attributed to expansion projects will move into the fourth quarter. In
addition, the Company spent $65.0 million on real estate acquisition
activities in the Silicon Valley and $541.7 million on the IXEurope
acquisition, net of cash acquired, in the third quarter.
The Company generated cash from operating activities of $48.7
million as compared to $38.1 million in the previous quarter. Cash
used in investing activities was $718.2 million as compared to $157.4
million in the previous quarter with the increase largely attributed
to the IXEurope acquisition.
As of September 30, 2007, the Company's cash, cash equivalents and
investments were $436.4 million, as compared to $324.0 million at the
end of the previous quarter. This included net proceeds attributed to
its $750.0 million concurrent underwritten public offering of
4,211,939 shares of common stock and the 3.00% Convertible
Subordinated Notes due 2014, which closed on September 26, 2007 offset
in part by the costs attributed to the IXEurope acquisition.
Other Company Developments & Metrics
-- On a same IBX basis (defined as IBX centers which have been
available for new customer installs for at least four full
quarters), revenues were $97.1 million; cost of revenues were
$53.9 million; cost of revenues, excluding depreciation,
amortization, accretion and stock-based compensation, were
$34.3 million and cash gross margins for the quarter were 65%
-- On a weighted average basis, and excluding the impact of the
IXEurope acquisition, the number of cabinets billing was
approximately 20,100 representing an approximate utilization
rate of 78%
-- U.S. interconnection service revenues were 21% of U.S.
revenues for the quarter. Interconnection services represent
approximately 18% of total worldwide revenues. We expect
interconnection revenue to decline to 15% to 16% of total
worldwide revenues as the full quarter impact of IXEurope
revenues is reflected in the Company's results in the fourth
quarter.
Business Outlook
As previously announced, for the full year of 2007, total revenues
are expected to be in the range of $416.0 to $417.5 million, including
approximately $38.0 million anticipated from Europe. Total year cash
gross margins are expected to be approximately 62%, including
approximately $6.9 million of net cash costs attributed to its
expansion IBXs. EBITDA for the year is expected to be between $153.0
and $154.0 million. Capital expenditures for 2007 are expected to be
$405.0 to $415.0 million, including approximately $46.0 million of
ongoing capital expenditures and approximately $30.0 million of
capital expenditures related to Europe. Expansion capital expenditures
are for the build outs of the Frankfurt, London, Paris, Singapore,
Tokyo, Washington, D.C., and Chicago expansions opened this year, as
well as the announced expansions in London, Los Angeles, New York,
Silicon Valley and Washington D.C. metro areas.
For the full year of 2008, total revenues are expected to be in
the range of $625.0 to $640.0 million, including $150.0 to $160.0
million anticipated from Europe. EBITDA for the year is expected to be
between $240.0 and $250.0 million, including $42.0 to $50.0 million
anticipated from Europe. Capital expenditures for 2008 are expected to
be in a range of $300.0 to $310.0 million, comprised of approximately
$45.0 million of ongoing capital expenditures, including $15.0 million
related to Europe, and $255.0 to $265.0 million of expansion capital
expenditures, including $50.0 million related to Europe.
The Company will discuss its results and guidance on its quarterly
conference call on Tuesday, October 30, 2007, at 5:30 p.m. EDT (2:30
p.m. PDT). To hear the conference call live, please dial
1-210-839-8500 (domestic and international) and reference the pass
code (EQIX). A simultaneous live Webcast of the call will be available
over the Internet at www.equinix.com, under the Investor Relations
heading. A replay of the call will be available beginning on Tuesday,
October 30, 2007 at 7:30 p.m. EDT (4:30 p.m. PDT) by dialing
1-203-369-1656. In addition, the Webcast will be available on the
Company's Web site at www.equinix.com. No password is required for
either method of replay.
About Equinix
Equinix is the leading global provider of network-neutral data
center and interconnection services, offering premium colocation,
traffic exchange and outsourced IT infrastructure solutions. Global
enterprises, content companies, systems integrators and network
service providers look to Equinix Internet Business Exchange (IBX(R))
centers for world-class reliability and network diversity. Equinix IBX
centers serve as critical, core hubs for IP networks and Internet
operations worldwide. With 36 IBX centers located in 17 strategic
markets across North America, Europe and Asia-Pacific, Equinix enables
customers to reliably operate their mission-critical infrastructure on
a global basis.
This press release contains forward-looking statements that
involve risks and uncertainties. Actual results may differ materially
from expectations discussed in such forward-looking statements.
Factors that might cause such differences include, but are not limited
to, the challenges of acquiring, operating and constructing IBX
centers and developing, deploying and delivering Equinix services;
unanticipated costs or difficulties relating to the integration of
IXEurope into Equinix; a failure to receive significant revenue from
customers in recently built out data centers; failure to complete any
financing arrangements contemplated from time to time; competition
from existing and new competitors; the ability to generate sufficient
cash flow or otherwise obtain funds to repay new or outstanding
indebtedness; the loss or decline in business from our key customers;
the results of any litigation relating to past stock option grants and
practices; and other risks described from time to time in Equinix's
filings with the Securities and Exchange Commission. In particular,
see Equinix's recent quarterly and annual reports filed with the
Securities and Exchange Commission, copies of which are available upon
request from Equinix. Equinix does not assume any obligation to update
the forward-looking information contained in this press release.
Equinix and IBX are registered trademarks of Equinix, Inc.
Internet Business Exchange is a trademark of Equinix, Inc.
Non-GAAP Financial Measures
Equinix continues to provide all information required in
accordance with generally accepted accounting principles (GAAP), but
it believes that evaluating its ongoing operating results may be
difficult if limited to reviewing only GAAP financial measures.
Accordingly, Equinix uses non-GAAP financial measures, such as
non-GAAP revenues, EBITDA, cash cost of revenues, cash gross margins,
cash operating expenses (also known as cash selling, general and
administrative expenses or cash SG&A), non-GAAP net income (loss),
free cash flow and adjusted free cash flow to evaluate its operations.
In presenting these non-GAAP financial measures, Equinix excludes
certain non-cash or non-recurring items that it believes are not good
indicators of the Company's current or future operating performance.
These non-cash or non-recurring items are a non-recurring revenue
adjustment with respect to 2006 results, depreciation, amortization,
accretion, stock-based compensation, restructuring charges and, with
respect to 2006 results, the gain on Honolulu IBX sale, and with
respect to 2007 results, the loss from conversion and extinguishment
of debt. Recent legislative and regulatory changes encourage use of
and emphasis on GAAP financial metrics and require companies to
explain why non-GAAP financial metrics are relevant to management and
investors. Equinix excludes these non-cash or non-recurring items in
order for Equinix's lenders, investors, and industry analysts who
review and report on the Company, to better evaluate the Company's
operating performance and cash spending levels relative to its
industry sector and competitor base.
Equinix excludes depreciation expense as these charges primarily
relate to the initial construction costs of our IBX centers and do not
reflect our current or future cash spending levels to support our
business. Our IBX centers are long-lived assets, and have an economic
life greater than ten years. The construction costs of our IBX centers
do not recur and future capital expenditures remain minor relative to
our initial investment. This is a trend we expect to continue. In
addition, depreciation is also based on the estimated useful lives of
our IBX centers. These estimates could vary from actual performance of
the asset, are based on historic costs incurred to build out our IBX
centers, and are not indicative of current or expected future capital
expenditures. Therefore, Equinix excludes depreciation from its
operating results when evaluating its operations.
In addition, in presenting the non-GAAP financial measures,
Equinix excludes amortization expense related to certain intangible
assets, as it represents a cost that may not recur and is not a good
indicator of the Company's current or future operating performance.
Equinix excludes accretion expense, both as it relates to its asset
retirement obligations as well as its accrued restructuring charge
liabilities, as these expenses represent costs, which Equinix believes
are not meaningful in evaluating the Company's current operations.
Equinix excludes non-cash stock-based compensation expense as it
represents expense attributed to stock awards that have no current or
future cash obligations. As such, we, and our investors and analysts,
exclude this stock-based compensation expense when assessing the cash
generating performance of our operations. Equinix excludes
restructuring charges from its non-GAAP financial measures. The
restructuring charges relate to the Company's decision to exit leases
for excess space adjacent to several of our IBX centers, which we do
not intend to build out now or in the future. With respect to its 2006
results, Equinix reports non-GAAP revenues and excludes the gain on
Honolulu IBX sale. Non-GAAP revenues exclude a revenue adjustment
recorded in the fourth quarter of 2006 in connection with our adoption
of Staff Accounting Bulletin No. 108, which is a one-time adjustment
and will not recur. The gain on Honolulu IBX sale represents a unique
transaction for the Company and future sales of IBX centers are not
expected. The Honolulu market was not considered a core, strategic
market for the Company. With respect to its 2007 results, Equinix
excludes the loss from conversion and extinguishment of debt as this
activity is not typical for the company. Management believes such
items as restructuring charges, the gain on the sale of an IBX center
and the loss from conversion and extinguishment of debt are unique
transactions that are not expected to recur, and consequently, does
not consider these items as a normal component of expenses or income
related to current and ongoing operations.
Our management does not itself, nor does it suggest that investors
should, consider such non-GAAP financial measures in isolation from,
or as a substitute for, financial information prepared in accordance
with GAAP. However, we have presented such non-GAAP financial measures
to provide investors with an additional tool to evaluate our operating
results in a manner that focuses on what management believes to be our
core, ongoing business operations. Management believes that the
inclusion of these non-GAAP financial measures provide consistency and
comparability with past reports and provide a better understanding of
the overall performance of the business and its ability to perform in
subsequent periods. Equinix believes that if it did not provide such
non-GAAP financial information, investors would not have all the
necessary data to analyze Equinix effectively.
Investors should note, however, that the non-GAAP financial
measures used by Equinix may not be the same non-GAAP financial
measures, and may not be calculated in the same manner, as that of
other companies. In addition, whenever Equinix uses such non-GAAP
financial measures, it provides a reconciliation of non-GAAP financial
measures to the most closely applicable GAAP financial measure.
Investors are encouraged to review the related GAAP financial measures
and the reconciliation of these non-GAAP financial measures to their
most directly comparable GAAP financial measure.
Equinix does not provide forward-looking guidance for certain
financial data, such as depreciation, amortization, accretion, net
income (loss) from operations, cash generated from operating
activities and cash used in investing activities, and as a result, is
not able to provide a reconciliation of GAAP to non-GAAP financial
measures for forward-looking data. Equinix intends to calculate the
various non-GAAP financial measures in future periods consistent with
how it was calculated for the three and nine months ended September
30, 2007 and 2006, presented within this press release.
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP PRESENTATION
(in thousands, except per share detail)
(unaudited)
Three Months Ended Nine Months Ended
---------------------------- -------------------
September June September September September
30, 30, 30, 30, 30,
2007 2007 2006 2007 2006
--------- -------- --------- --------- ---------
Recurring revenues $ 99,288 $87,904 $69,918 $268,078 $196,759
Non-recurring
revenues 4,494 3,933 3,808 12,650 10,384
--------- -------- --------- --------- ---------
Revenues 103,782 91,837 73,726 280,728 207,143
Cost of revenues 62,891 55,609 49,137 171,265 138,045
--------- -------- --------- --------- ---------
Gross profit 40,891 36,228 24,589 109,463 69,098
--------- -------- --------- --------- ---------
Operating expenses:
Sales and marketing 9,630 8,520 7,502 27,602 23,180
General and
administrative 25,182 24,854 18,631 72,122 53,486
Restructuring
charges - 407 1,527 407 1,527
--------- -------- --------- --------- ---------
Total operating
expenses 34,812 33,781 27,660 100,131 78,193
--------- -------- --------- --------- ---------
Income (loss) from
operations 6,079 2,447 (3,071) 9,332 (9,095)
--------- -------- --------- --------- ---------
Interest and other
income (expense):
Interest income 3,309 5,082 1,724 10,340 5,065
Interest expense (5,662) (5,986) (3,604) (15,240) (10,820)
Other income
(expense) 3,167 (129) 53 3,168 (164)
Loss on conversion
and extinguishment
of debt (2,554) - - (5,949) -
--------- -------- --------- --------- ---------
Total interest
and other, net (1,740) (1,033) (1,827) (7,681) (5,919)
--------- -------- --------- --------- ---------
Net income (loss)
before income taxes
and cumulative
effect of a change
in accounting
principle 4,339 1,414 (4,898) 1,651 (15,014)
Income taxes (215) (197) (270) (766) (870)
--------- -------- --------- --------- ---------
Net income (loss)
before cumulative
effect of a change
in accounting
principle 4,124 1,217 (5,168) 885 (15,884)
Cumulative effect
of a change in
accounting
principle - - - - 376
--------- -------- --------- --------- ---------
Net income (loss) $ 4,124 $ 1,217 $(5,168) $ 885 $(15,508)
========= ======== ========= ========= =========
Net income (loss) per
share:
Basic net income
(loss) per share $ 0.13 $ 0.04 $ (0.18) $ 0.03 $ (0.55)
========= ======== ========= ========= =========
Diluted net income
(loss) per share $ 0.12 $ 0.04 $ (0.18) $ 0.03 $ (0.55)
========= ======== ========= ========= =========
Shares used in
computing basic
net income (loss)
per share 31,683 31,126 28,743 30,845 28,356
========= ======== ========= ========= =========
Shares used in
computing diluted
net income (loss)
per share 33,112 32,671 28,743 32,339 28,356
========= ======== ========= ========= =========
- ----------------------------------------------------------------------
Non-GAAP net income
(loss) (1) $ 17,167 $11,669 $ 3,244 $ 38,273 $ 9,559
========= ======== ========= ========= =========
(1) Non-GAAP net income (loss) excludes stock-based compensation,
restructuring charges and loss on debt conversion and
extinguishment as follows:
Net income
(loss) $ 4,124 $ 1,217 $(5,168) $ 885 $(15,508)
Stock-based
compensation 10,489 10,045 6,885 31,032 23,540
Restructuring
charges - 407 1,527 407 1,527
Loss on
conversion and
extinguishment
of debt 2,554 - - 5,949 -
--------- -------- --------- --------- ---------
Non-GAAP net
income
(loss) $ 17,167 $11,669 $ 3,244 $ 38,273 $ 9,559
========= ======== ========= ========= =========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP
PRESENTATION
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
----------------------------- -------------------
September June September September September
30, 30, 30, 30, 30,
2007 2007 2006 2007 2006
--------- --------- --------- --------- ---------
Recurring revenues $ 99,288 $ 87,904 $ 69,918 $268,078 $196,759
Non-recurring
revenues 4,494 3,933 3,808 12,650 10,384
--------- --------- --------- --------- ---------
Revenues (1) 103,782 91,837 73,726 280,728 207,143
Cash cost of
revenues (2) 40,240 33,739 29,738 105,910 81,855
--------- --------- --------- --------- ---------
Cash gross
profit (3) 63,542 58,098 43,988 174,818 125,288
--------- --------- --------- --------- ---------
Cash operating
expenses (4):
Cash sales and
marketing
expenses(5) 7,283 6,862 5,864 20,834 17,488
Cash general and
administrative
expenses (6) 15,620 15,925 13,197 45,656 36,000
--------- --------- --------- --------- ---------
Total cash
operating
expenses (7) 22,903 22,787 19,061 66,490 53,488
--------- --------- --------- --------- ---------
EBITDA (8) $ 40,639 $ 35,311 $ 24,927 $108,328 $ 71,800
========= ========= ========= ========= =========
Cash gross margins
(9) 61% 63% 60% 62% 60%
========= ========= ========= ========= =========
EBITDA flow-through
rate (10) 45% 44% 17% 51% 46%
========= ========= ========= ========= =========
- --------------------
(1)The geographic split of our revenues is presented below:
U.S. revenues $ 83,685 $ 78,250 $ 63,654 $234,461 $178,394
Asia-Pacific
revenues 14,643 13,587 10,072 40,813 28,749
Europe revenues 5,454 - - 5,454 -
--------- --------- --------- --------- ---------
Revenues $103,782 $ 91,837 $ 73,726 $280,728 $207,143
========= ========= ========= ========= =========
Revenues on a services basis is presented below:
Colocation $ 75,282 $ 65,641 $ 51,678 $200,682 $145,235
Interconnection 18,798 17,653 13,862 53,171 38,310
Managed
infrastructure 4,830 4,285 4,066 13,214 12,045
Rental 378 325 312 1,011 1,169
--------- --------- --------- --------- ---------
Recurring
revenues 99,288 87,904 69,918 268,078 196,759
Non-recurring
revenues 4,494 3,933 3,808 12,650 10,384
--------- --------- --------- --------- ---------
Revenues $103,782 $ 91,837 $ 73,726 $280,728 $207,143
========= ========= ========= ========= =========
New IBX centers are IBX centers which have not been available for
customer installs for at least four full quarters. Revenues on a
same IBX versus new IBX basis is presented below:
Same IBX centers $ 97,073 $ 80,470 $ 71,572 $255,020 $202,292
New IBX centers 6,709 11,367 2,154 25,708 4,851
--------- --------- --------- --------- ---------
Revenues $103,782 $ 91,837 $ 73,726 $280,728 $207,143
========= ========= ========= ========= =========
(2)We define cash cost of revenues as cost of revenues less
depreciation, amortization, accretion and stock-based
compensation as presented below:
Cost of revenues $ 62,891 $ 55,609 $ 49,137 $171,265 $138,045
Depreciation,
amortization
and accretion
expense (21,773) (20,866) (18,735) (62,336) (53,805)
Stock-based
compensation
expense (878) (1,004) (664) (3,019) (2,385)
--------- --------- --------- --------- ---------
Cash cost of
revenues $ 40,240 $ 33,739 $ 29,738 $105,910 $ 81,855
========= ========= ========= ========= =========
The geographic split of our cash cost of revenues is presented
below:
U.S. cash cost
of revenues $ 30,677 $ 27,899 $ 25,154 $ 85,074 $ 68,417
Asia-Pacific
cash cost of
revenues 6,536 5,840 4,584 17,809 13,438
Europe cash cost
of revenues 3,027 - - 3,027 -
--------- --------- --------- --------- ---------
Cash cost of
revenues $ 40,240 $ 33,739 $ 29,738 $105,910 $ 81,855
========= ========= ========= ========= =========
New IBX centers are IBX centers which have not been available for
customer installs for at least four full quarters. Cost of
revenues and cash cost of revenues on a same IBX versus new IBX
basis is presented below:
Same IBX
centers-cash
cost of
revenues $ 34,285 $ 25,884 $ 26,422 $ 86,015 $ 73,747
Same IBX
centers-
depreciation,
amortization
and accretion
expense 18,905 15,948 16,445 50,738 48,410
Same IBX
centers-stock-
based
compensation
expense 751 880 632 2,637 2,353
--------- --------- --------- --------- ---------
Same IBX
centers cost
of revenues 53,941 42,712 43,499 139,390 124,510
--------- --------- --------- --------- ---------
New IBX centers-
cash cost of
revenues 5,955 7,855 3,316 19,895 8,108
New IBX centers-
depreciation,
amortization
and accretion
expense 2,868 4,918 2,290 11,598 5,395
New IBX centers-
stock-based
compensation
expense 127 124 32 382 32
--------- --------- --------- --------- ---------
New IBX
centers cost
of revenues 8,950 12,897 5,638 31,875 13,535
--------- --------- --------- --------- ---------
Cost of
revenues $ 62,891 $ 55,609 $ 49,137 $171,265 $138,045
========= ========= ========= ========= =========
(3)We define cash gross profit as revenues less cash cost of revenues
(as defined above).
(4)We define cash operating expenses as operating expenses less
depreciation, amortization and stock-based compensation. We also
refer to cash operating expenses as cash selling, general and
administrative expenses or "cash SG&A".
(5)We define cash sales and marketing expenses as sales and marketing
expenses less depreciation, amortization and stock-based
compensation as presented below:
Sales and
marketing
expenses $ 9,630 $ 8,520 $ 7,502 $ 27,602 $ 23,180
Depreciation and
amortization
expense (298) (15) (15) (328) (45)
Stock-based
compensation
expense (2,049) (1,643) (1,623) (6,440) (5,647)
--------- --------- --------- --------- ---------
Cash sales and
marketing
expenses $ 7,283 $ 6,862 $ 5,864 $ 20,834 $ 17,488
========= ========= ========= ========= =========
(6)We define cash general and administrative expenses as general and
administrative expenses less depreciation, amortization and
stock-based compensation as presented below:
General and
administrative
expenses $ 25,182 $ 24,854 $ 18,631 $ 72,122 $ 53,486
Depreciation and
amortization
expense (2,000) (1,531) (836) (4,893) (1,978)
Stock-based
compensation
expense (7,562) (7,398) (4,598) (21,573) (15,508)
--------- --------- --------- --------- ---------
Cash general
and
administrative
expenses $ 15,620 $ 15,925 $ 13,197 $ 45,656 $ 36,000
========= ========= ========= ========= =========
(7)Our cash operating expenses, or cash SG&A, as defined above, is
presented below:
Cash sales and
marketing
expenses $ 7,283 $ 6,862 $ 5,864 $ 20,834 $ 17,488
Cash general and
administrative
expenses 15,620 15,925 13,197 45,656 36,000
--------- --------- --------- --------- ---------
Cash SG&A $ 22,903 $ 22,787 $ 19,061 $ 66,490 $ 53,488
========= ========= ========= ========= =========
The geographic split of our cash operating expenses, or cash SG&A,
is presented below:
U.S. cash SG&A $ 17,565 $ 19,328 $ 16,261 $ 53,964 $ 44,187
Asia-Pacific
cash SG&A 3,953 3,459 2,800 11,141 9,301
Europe cash SG&A 1,385 - - 1,385 -
--------- --------- --------- --------- ---------
Cash SG&A $ 22,903 $ 22,787 $ 19,061 $ 66,490 $ 53,488
========= ========= ========= ========= =========
(8)We define EBITDA as income (loss) from operations less
depreciation, amortization, accretion, stock-based compensation
expense and restructuring charges as presented below:
Income (loss)
from operations $ 6,079 $ 2,447 $ (3,071) $ 9,332 $ (9,095)
Depreciation,
amortization
and accretion
expense 24,071 22,412 19,586 67,557 55,828
Stock-based
compensation
expense 10,489 10,045 6,885 31,032 23,540
Restructuring
charges - 407 1,527 407 1,527
--------- --------- --------- --------- ---------
EBITDA $ 40,639 $ 35,311 $ 24,927 $108,328 $ 71,800
========= ========= ========= ========= =========
The geographic split of our EBITDA is presented below:
U.S. income
(loss) from
operations $ 6,386 $ 1,246 $ (3,967) $ 8,000 $ (9,619)
U.S.
depreciation,
amortization
and accretion
expense 20,175 20,626 18,607 60,240 52,892
U.S. stock-based
compensation
expense 8,882 8,744 6,072 26,776 20,990
U.S.
restructuring
charges - 407 1,527 407 1,527
--------- --------- --------- --------- ---------
U.S. EBITDA 35,443 31,023 22,239 95,423 65,790
--------- --------- --------- --------- ---------
Asia-Pacific
income (loss)
from operations 312 1,201 896 1,951 524
Asia-Pacific
depreciation,
amortization
and accretion
expense 2,584 1,786 979 6,005 2,936
Asia-Pacific
stock-based
compensation
expense 1,258 1,301 813 3,907 2,550
Asia-Pacific
restructuring
charges - - - - -
--------- --------- --------- --------- ---------
Asia-Pacific
EBITDA 4,154 4,288 2,688 11,863 6,010
--------- --------- --------- --------- ---------
Europe income
(loss) from
operations (619) - - (619) -
Europe
depreciation,
amortization
and accretion
expense 1,312 - - 1,312 -
Europe stock-
based
compensation
expense 349 - - 349 -
Europe
restructuring
charges - - - - -
--------- --------- --------- --------- ---------
Europe EBITDA 1,042 - - 1,042 -
--------- --------- --------- --------- ---------
EBITDA $ 40,639 $ 35,311 $ 24,927 $108,328 $ 71,800
========= ========= ========= ========= =========
(9)We define cash gross margins as cash gross profit divided by
revenues.
Our cash gross margins by geographic region is presented below:
U.S. cash gross
margins 63% 64% 60% 64% 62%
========= ========= ========= ========= =========
Asia-Pacific
cash gross
margins 55% 57% 54% 56% 53%
========= ========= ========= ========= =========
Europe cash
gross margins 44% n/a n/a 44% n/a
========= ========= ========= ========= =========
Same IBX centers are IBX centers which have been available for
customer installs for at least four full quarters. Our cash gross
margins for same IBX centers is presented below:
Same IBX cash
gross margins 65% 68% 63% 66% 64%
========= ========= ========= ========= =========
(10)We define EBITDA flow-through rate as incremental EBITDA growth
divided by incremental revenue growth as follows:
EBITDA - current
period $ 40,639 $ 35,311 $ 24,927 $108,328 $ 71,800
Less EBITDA -
prior period (35,311) (32,378) (24,038) (79,237) (55,802)
--------- --------- --------- --------- ---------
EBITDA growth $ 5,328 $ 2,933 $ 889 $ 29,091 $ 15,998
========= ========= ========= ========= =========
Revenues -
current period $103,782 $ 91,837 $ 73,726 $280,728 $207,143
Less Non-GAAP
revenues -
prior period (91,837) (85,109) (68,548) (223,225) (172,373)
--------- --------- --------- --------- ---------
Non-GAAP
revenue
growth $ 11,945 $ 6,728 $ 5,178 $ 57,503 $ 34,770
========= ========= ========= ========= =========
EBITDA flow-
through rate 45% 44% 17% 51% 46%
========= ========= ========= ========= =========
EQUINIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Assets September December
30, 31,
2007 2006
----------- ----------
Cash, cash equivalents and investments $ 436,362 $ 156,481
Accounts receivable, net 49,176 26,864
Property and equipment, net 1,069,080 546,395
Goodwill and other intangible assets, net 500,468 17,441
Debt issuance costs, net 22,474 3,006
Prepaid expenses 15,245 7,160
Deposits 12,167 3,932
Taxes receivable 11,807 5
Deferred tax assets 7,801 6,910
Other assets 5,986 3,638
----------- ----------
Total assets $2,130,566 $ 771,832
=========== ==========
Liabilities and Stockholders' Equity
Accounts payable $ 18,992 $ 4,515
Accrued expenses 75,347 22,754
Accrued property and equipment 60,469 23,337
Accrued restructuring charges 33,813 41,572
Capital lease and other financing obligations 98,266 94,699
Mortgage and loan payable 282,108 98,896
Convertible debt 678,236 86,250
Deferred rent 26,051 20,924
Deferred installation revenue 17,705 11,694
Deferred recurring revenue 11,135 6,732
Asset retirement obligations 4,859 3,985
Other liabilities 8,908 1,446
----------- ----------
Total liabilities 1,315,889 416,804
----------- ----------
Common stock 36 29
Additional paid-in capital 1,356,427 904,573
Accumulated other comprehensive income 10,773 3,870
Accumulated deficit (552,559) (553,444)
----------- ----------
Total stockholders' equity 814,677 355,028
----------- ----------
Total liabilities and stockholders' equity $2,130,566 $ 771,832
=========== ==========
- ----------------------------------------------------------- ----------
Ending headcount by geographic region is as
follows:
U.S. headcount 524 442
Asia-pacific headcount 186 174
Europe headcount 164 -
----------- ----------
Total headcount 874 616
=========== ==========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - GAAP PRESENTATION
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
------------------------------- ----------------------
September June September September September
30, 30, 30, 30, 30,
2007 2007 2006 2007 2006
---------- ---------- --------- ----------- ----------
Net cash
provided by
operating
activities $ 48,427 $ 37,862 $ 20,655 $ 106,139 $ 49,553
Net cash used
in investing
activities (721,257) (181,892) (60,757) (951,206) (121,678)
Net cash
provided by
(used in)
financing
activities 783,240 50,519 47,461 1,107,012 37,352
Effect of
foreign
currency
exchange rates
on cash and
cash
equivalents (1,556) 449 (20) (1,056) 145
---------- ---------- --------- ----------- ----------
Net increase
(decrease) in
cash and cash
equivalents 108,854 (93,062) 7,339 260,889 (34,628)
Cash and cash
equivalents at
beginning of
period 234,598 327,660 77,300 82,563 119,267
---------- ---------- --------- ----------- ----------
Cash and cash
equivalents at
end of period $ 343,452 $ 234,598 $ 84,639 $ 343,452 $ 84,639
========== ========== ========= =========== ==========
In addition to the above condensed consolidated statements of cash
flows presented on a GAAP basis, the Company presents non-GAAP
condensed consolidated statements of cash flows which combine the
Company's short-term and long-term investments with our cash and cash
equivalents in an effort to present our total unrestricted cash and
equivalent balances as presented herein in our condensed consolidated
balance sheets.
Following is a reconciliation of our cash and cash equivalents to our
cash, cash equivalents and investments, which is the basis of how our
non-GAAP condensed consolidated statements of cash flows are
presented on the following page:
Cash and cash
equivalents $ 343,452 $ 234,598 $ 84,639 $ 343,452 $ 84,639
Short-term
investments 64,005 67,728 61,322 64,005 61,322
Long-term
investments 28,905 21,640 20,385 28,905 20,385
---------- ---------- --------- ----------- ----------
Cash, cash
equivalents
and
investments as
presented on
condensed
balance sheet
presented
herein $ 436,362 $ 323,966 $166,346 $ 436,362 $ 166,346
========== ========== ========= =========== ==========
EQUINIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - NON-GAAP
PRESENTATION (1)
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
------------------------------- --------------------
September June September September September
30, 30, 30, 30, 30,
2007 2007 2006 2007 2006
---------- ---------- --------- ---------- ---------
Cash flows from
operating
activities:
Net income
(loss) $ 4,124 $ 1,217 $ (5,168) $ 885 $(15,508)
Adjustments to
reconcile net
income (loss)
to net cash
provided by
operating
activities:
Depreciation,
amortization
and accretion 24,071 22,412 19,586 67,557 55,828
Stock-based
compensation 10,489 10,045 6,885 31,032 23,540
Debt issuance
costs 812 784 227 1,985 643
Restructuring
charges - 407 1,527 407 1,527
Gain on foreign
currency hedge (1,494) - - (1,494) -
Other
reconciling
items (529) 138 437 (384) (354)
Changes in
operating
assets and
liabilities:
Accounts
receivable (5,658) (494) (646) (7,068) (6,908)
Accounts
payable and
accrued
expenses 17,786 7,950 (1,134) 23,079 470
Accrued
restructuring
charges (3,203) (3,354) (3,088) (10,100) (9,213)
Other assets
and
liabilities 2,275 (965) 2,029 1,008 (472)
---------- ---------- --------- ---------- ---------
Net cash
provided by
operating
activities 48,673 38,140 20,655 106,907 49,553
---------- ---------- --------- ---------- ---------
Cash flows from
investing
activities:
Purchase of
IXEurope, less
cash acquired (541,729) - - (541,729) -
Purchase of Los
Angeles IBX
property (19) (49,040) - (49,059) -
Purchase of San
Jose IBX
property (64,971) - - (71,471) -
Purchase of
Chicago IBX
property - - - - (9,766)
Purchases of
other property
and equipment (88,921) (139,832) (46,620) (295,809) (102,904)
Accrued property
and equipment (23,939) 31,425 (3,341) 23,940 2,814
Other investing
activities 1,347 - 2 877 8
---------- ---------- --------- ---------- ---------
Net cash used
in investing
activities (718,232) (157,447) (49,959) (933,251) (109,848)
---------- ---------- --------- ---------- ---------
Cash flows from
financing
activities:
Proceeds from
stock options
and employee
stock purchase
plans 10,406 6,876 8,180 27,568 28,756
Proceeds from
follow-on
common stock
offering 339,946 - - 339,946 -
Proceeds from
convertible
subordinated
notes 395,986 - - 645,986 -
Proceeds from
loans payable 49,491 44,656 - 118,754 -
Proceeds from
borrowings
under credit
line - - 40,000 - 40,000
Repayment of
borrowings
under credit
line - - - - (30,000)
Repayment of
capital lease
and other
financing
obligations (500) (480) (391) (1,445) (1,130)
Repayment of
mortgage
payable (543) (533) (319) (1,573) (835)
Debt issuance
costs (11,546) - (253) (22,224) (253)
Other financing
activities - - 244 - 814
---------- ---------- --------- ---------- ---------
Net cash
provided by
(used in)
financing
activities 783,240 50,519 47,461 1,107,012 37,352
---------- ---------- --------- ---------- ---------
Effect of foreign
currency
exchange rates
on cash and cash
equivalents (1,285) 355 250 (787) 434
---------- ---------- --------- ---------- ---------
Net increase
(decrease) in
cash, cash
equivalents and
investments 112,396 (68,433) 18,407 279,881 (22,509)
Cash, cash
equivalents and
investments at
beginning of
period 323,966 392,399 147,939 156,481 188,855
---------- ---------- --------- ---------- ---------
Cash, cash
equivalents and
investments at
end of period $ 436,362 $ 323,966 $166,346 $ 436,362 $166,346
========== ========== ========= ========== =========
Free cash flow
(2) $(669,559) $(119,307) $(29,304) $(826,344) $(60,295)
========== ========== ========= ========== =========
Adjusted free
cash flow (3) $ (62,840) $ (70,267) $(29,304) $(164,085) $(50,529)
========== ========== ========= ========== =========
- -----------------
(1)The cash flow statements presented herein combine our short-term
and long-term investments with our cash and cash equivalents in an
effort to present our total unrestricted cash and equivalent
balances. In our quarterly filings with the SEC on Forms 10-Q and
10-K, the purchases, sales and maturities of our short-term and
long-term investments will be presented as activities within the
investing activities portion of the cash flow statements.
(2)We define free cash flow as net cash provided by operating
activities plus net cash used in investing activities (excluding
the purchases, sales and maturities of short-term and long-term
investments) as presented below:
Net cash
provided by
operating
activities as
presented
above $ 48,673 $ 38,140 $ 20,655 $ 106,907 $ 49,553
Net cash used
in investing
activities as
presented
above (718,232) (157,447) (49,959) (933,251) (109,848)
---------- ---------- --------- ---------- ---------
Free cash flow $(669,559) $(119,307) $(29,304) $(826,344) $(60,295)
========== ========== ========= ========== =========
(3)We define adjusted free cash flow as free cash flow (as defined
above) excluding any purchases or sales of real estate and
acquisitions as presented below:
Free cash flow
(as defined
above) $(669,559) $(119,307) $(29,304) $(826,344) $(60,295)
Less purchase
of IXEurope,
less cash
acquired 541,729 - - 541,729 -
Less purchase
of Los
Angeles IBX
property 19 49,040 - 49,059 -
Less purchase
of San Jose
IBX property 64,971 - - 71,471 -
Less purchase
of Chicago
IBX property - - - - 9,766
---------- ---------- --------- ---------- ---------
Adjusted
free cash
flow $ (62,840) $ (70,267) $(29,304) $(164,085) $(50,529)
========== ========== ========= ========== =========
CONTACT: Equinix, Inc.
Jason Starr, 650-513-7402 (Investor Relations)
jstarr@equinix.com
or
K/F Communications, Inc.
David Fonkalsrud, 415-255-6506 (Media)
dave@kfcomm.com